FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
EXHIBIT
10.3
FIRST
AMENDMENT TO
This
First Amendment to Employment
Agreement (this “Amendment”) is entered into on September 6, 2007, but is
made effective as set forth in Section 7 below, by and among Keystone Nazareth
Bank & Trust Company (“KNBT Bank”), KNBT Bancorp, Inc.
(“KNBT”), National Penn Bank (“NPBank”), National Penn Bancshares,
Inc. (“NPB” and together with NPBank, the “Employer”), and Xxxxxx
X. Xxxxxx (the “Executive”).
BACKGROUND
1. KNBT
is a Pennsylvania
business corporation, and KNBT Bank is a Pennsylvania chartered savings bank
and
wholly-owned subsidiary of KNBT.
2. The
Executive is
presently employed by each of KNBT and KNBT Bank as its Senior Executive
Vice
President and Chief Risk Officer pursuant to an Employment Agreement, dated
December 28, 2006 (the “Employment Agreement”).
3. On
September 6, 0000, XXX
and KNBT entered into an Agreement (the “Merger Agreement”) providing,
among other things, for the merger of KNBT with and into NPB (the
“Merger”), to be followed by the Bank Merger (as defined in the Merger
Agreement).
4. It
is the desire of the
boards of directors of NPB and NPBank that the Executive continue the
Executive’s employment from and after the Effective Time (as defined in the
Merger Agreement), on the terms and conditions set forth in the Employment
Agreement, as amended by this Amendment, in order that the experience the
Executive has gained throughout the Executive’s career and the management
ability the Executive has demonstrated will continue to be available to NPB
and
NPBank. The Executive is willing to continue such employment on the
terms and conditions set forth in the Employment Agreement, as amended by
this
Amendment.
AGREEMENT
NOW
THEREFORE, for good and valuable consideration the receipt and sufficiency
of
which are hereby acknowledged, and intending to be legally bound hereby,
the
parties agree as follows:
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1.
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Definitions.
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a.
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All
references to the “Bank,” the “Company” and the “Employer” in the
Employment Agreement shall be amended as
follows:
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i.
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“Bank”
shall mean NPBank;
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ii.
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“Company”
shall mean NPB; and
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iii.
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“Employer”
shall mean collectively NPBank and
NPB;
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in
each
case, as defined in the introductory paragraph of this Amendment. All
references to the “Effective Time” in this Amendment shall mean the Effective
Time as defined in the Merger Agreement.
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b.
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All
references to “the Agreement” or “this Agreement” contained in the
Employment Agreement shall be deemed, for all purposes, to mean
the
Employment Agreement, as amended by this
Amendment.
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c.
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Capitalized
terms used, but not otherwise defined, in this Amendment shall
have the
meanings ascribed to such terms in the Employment Agreement, as
amended by
this Amendment.
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2.
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Duties. The
first sentence of Section 3(a) of the Employment Agreement shall
be
deleted in its entirety and replaced as
follows:
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Throughout
the Employment Period, the Executive shall serve as Group Executive Vice
President of the Bank, having such power, authority and responsibility and
performing such duties as are prescribed by or under the Bylaws of each of
the
Bank and the Company and as are customarily associated with such
position.
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3.
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Cash
and Other Compensation. Section 4(a) of the Employment
Agreement shall be amended by adding the following sentence at
the end
thereof:
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Notwithstanding
the foregoing, the parties acknowledge and agree that Executive’s Base Salary
for the fiscal year beginning January 1, 2008 shall be determined by the
Compensation Committee of KBNT’s board of directors, but in no event shall such
Base Salary be less than $206,000 nor more than $216,300.
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4.
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Working
Facilities and Expenses. The first sentence of Section 8 of
the Employment Agreement shall be deleted in its entirety and replaced
as
follows:
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It
is
understood by the parties that the Executive’s principal place of employment
shall be at the Employer’s office located at Route 512 and Highland Avenue in
Bethlehem, Pennsylvania, or at such other location within a 25-mile radius
of
such office, or at such other location as the Employer and the Executive
may
mutually agree upon.
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5.
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Termination
of Employment With Benefits. Section 9(a)(i)(D) of the
Employment Agreement shall be deleted in its entirety and replaced
as
follows:
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(D) a
change in the Executive’s principal place of employment by a distance in excess
of 25 miles from the Employer’s office located at Route 512 and Highland Avenue
in Bethlehem, Pennsylvania;
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6.
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Payments
Upon a Change of Control. Section 11(c) of the Employment Agreement
shall be deleted in its entirety and replaced as
follows:
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Upon
the
occurrence of the events specified in this Section 11(c), the Executive shall
be
entitled to receive certain payments at the times and in the amounts as
follows:
(i) As
a result of the change in control of KNBT Bancorp, Inc. (“KNBT”) and
Keystone Nazareth Bank & Trust Company (“KNBT Bank”) resulting from
the merger of KNBT with and into the Company, the Executive shall receive
a lump
sum payment as of the Effective Time in an amount equal to $306,978 (the
“KNBT CIC Payment”) from KNBT or KNBT Bank.
(ii) The
Executive shall receive a Severance Payment (defined below) from the Employer
within ten (10) business days of the earliest to occur of the following events,
if any: (A) the termination of the Executive’s employment during the
two-year period immediately following the Effective Time by the Employer
other
than for cause; (B) the termination of the Executive’s employment during the
two-year period immediately following the Effective Time by the Executive
pursuant to Section 9(a)(i) above; or (C) a Change in Control during the
period
of the Executive’s employment hereunder (each, a “Triggering
Event”). “Severance Payment” means a lump sum payment
determined as follows: (x) if the Triggering Event occurs during the
one-year period immediately following the Effective Time, then the Severance
Payment shall equal the KNBT CIC Payment; or (y) if the Triggering Event
occurs
after the one-year anniversary of the Effective Time, then the Severance
Payment
shall equal 1.0 times the Executive’s Base Amount (defined below);
provided, however, that in calculating the
Executive’s Base Amount for purposes of this clause (y), any income related to
the KNBT CIC Payment shall be excluded from such
calculation. “Base Amount” shall be equal to the Executive’s
average annualized income from the Employer, KNBT, KNBT Bank and their
predecessors includible in the Executive’s gross income (excluding any income
resulting from the vesting of restricted stock or the exercise of non-qualified
options on or prior to December 31, 2004) for the most recent five taxable
years
ending before the Triggering Event.
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(iii) The
Executive shall not be entitled to receive any payments or benefits under
Section 9 of this Agreement if she receives payments pursuant to Section
11(c)(ii).
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7.
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Effectiveness. Sections
1 and 2 and Sections 4 through 6 of this Amendment shall become
effective
as of the Effective Time. The remainder of this Amendment shall
become effective upon execution by the parties hereto as set forth
herein.
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8.
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Counterparts;
Facsimiles. This Amendment may be executed in any number of
separate counterparts, all of which, when delivered, shall together
constitute one and the same Amendment. Facsimile signatures
shall be considered original
signatures.
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9.
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Governing
Law. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania
applicable to contracts entered into and to be performed entirely
within
the Commonwealth of Pennsylvania.
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10.
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Conflicts;
No Other Amendments. To the extent that any term or
provision of this Amendment is or may be deemed expressly inconsistent
with any term or provision in the Employment Agreement, the terms
and
provisions hereof shall control. Except as expressly amended by
this Amendment, all of the terms, conditions and provisions of
the
Employment Agreement are hereby ratified and continue unchanged
and remain
in full force and effect. Neither this Amendment nor the
Employment Agreement shall be amended or otherwise changed except
by
another agreement signed by each party to this
Amendment.
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[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the parties have executed this Amendment on the date and
year
first above written, to be effective as set forth above.
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KNBT
BANCORP, INC.
By:
/s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx
X.
Xxxxxxx
Its: Chairman
of the
Board
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NATIONAL
PENN BANCSHARES, INC.
By:
/s/ Xxxxx X. Xxxxx
Name: Xxxxx
X.
Xxxxx
Its: President
and
CEO
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KEYSTONE
NAZARETH
BANK
& TRUST COMPANY
By:
/s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx
X.
Xxxxxxx
Its: Chairman
of the
Board
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NATIONAL
PENN BANK
By:
/s/ Xxxxx X. Xxxxx
Name: Xxxxx
X.
Xxxxx
Its: President
and
CEO
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EXECUTIVE:
/s/
Xxxxxx
X. Xxxxxx
Xxxxxx
X. Xxxxxx
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